When will Ofgem make decisions on National Grid’s IT issues?

When can we expect a decision from Ofgem over National Grid’s continuing struggles with data and IT?

It has now been 16 months since the regulator opened a formal investigation into National Grid’s market information. The regulator said that it would examine whether what was then National Grid Electricity Transmission (NGET) breached rules relating to its duty to operate the system in an economic and efficient manner. “This includes but is not limited to producing and publishing appropriate forecasts of demand.” (It added that opening an investigation did not imply that it had made any findings about non-compliance by NGET.)

Since that time National Grid has spun its Electricity System Operator functions (ESO) out from its transmission network functions and it is getting ready to take ESO and NGET forward under very different pricing settlements. I am sure National Grid, like the rest of us, would like to know Ofgem’s findings.

Ofgem has been warning National Grid for years about the need to improve its market information.

It was a year earlier, in 2017, that Ofgem  warned NGET that it must improve its IT and information services or it may undermine market confidence and suffer legal action. At that time, the regulator asked market participants to bring forward concerns about the system operator’s performance.

Behind that warning was an investigation into a series of occasions between November 2015 and January 2016 when NGET published erroneous information about de-rated margin calculations. That led to false market signals in the wholesale electricity market that breached EU rules on market manipulation. After investigation Ofgem said: “This incident is one of several instances over the past year where we have observed NGET providing inadequate information, IT systems and processes. We consider these incidents to be below the standards we, and market participants, expect from the system operator.”

The ESO, meanwhile, has been grappling with delays in IT rollout that will enable smaller generators and new entrants to participate in energy markets. New Power reported in its May 2017 issue over serious delays in this (see article below). It is still not clear that the ESO has been able to learn the lessons from its own report on IT implementation.


From New Power Report, May 2017:

Full introduction of a new electricity balancing system (EBS) that will let National Grid make better use of demand-side response, small generators and new flexibility options has been delayed until at least 2018. When the software procurement was competed in 2010 it was expected to go live in 2013. The latest revised schedule follows test running last winter that was expected to move directly to handover.
The current balancing system is “essentially manual”, according to National Grid, and uses a 1960s operating system designed to control “a handful of coal units”. Now the system has hundreds of balancing units that have to react to changing conditions. The system also has to cope with variable units and more cross-border interactions.
The new system is expected to allow the system operator (SO) to maintain system parameters more economically because it can call on more efficient options. It will also be more flexible to allow new market mechanisms to be incorporated, and more resilient. But installation has been repeatedly delayed.
In December 2014 National Grid announced a major re-plan and new go-live date of July 2016 after Capita completed a review of the test programme.

At that time the SO had announced that testing and release of the code that enables energy balancing despatch to be combined with margin assessment and network constraint management had been delayed and that there were difficulties in testing for the use of interconnectors and pumped storage.
The new programme pushes back to late next year the opportunity for new industry participants to receive equal weight in the electricity system balancing process.
The SO now identifies nearly 200 stakeholders at 54 companies that will interact with the new system.
National Grid told New Power it was aiming to use the new EBB functionality for internal “scheduling” from the day-ahead to four-hour-ahead of real-time in early summer 2017. Once that happens it will run with both existing and EBS systems – a change that will not affect external participants. It said: “The ‘dispatch’ implementation phase of EBS is being reviewed with regard to dates and functionality – the industry will be consulted accordingly.”

Delays to the EBS add to concerns about the implementation of new IT systems by the system operator. Last year the SO vowed to improve its processes after multiple failures dogged implementation of the Market Operation Data Interface System (Modis).
Modis was originally designed to report market data to meet new transparency requirements for financial trading, but National Grid decided to extend it to calculate and manage new data flows resulting from changes in the GB market, specifically the outcome of the Electricity Balancing Significant Code Review (EBSCR), which requires new calculations of margins and loss-of-load probabilities. “As a result, Modis evolved into a more complicated system used by multiple users for a variety of purposes,” National Grid said in a “lessons learned” report in June 2016.
Among the failures of the Modis implementation were missing data, mixing of live and test data, and incorrect time stamping. The review also found poor governance and inappropriate levels of system access, inadequate testing and poor backup arrangements in the event of system failure.
National Grid also admitted it had underestimated the importance and criticality of Modis and promised that, in future, its business and IT functions would “assess the complexity and criticality of projects together and communicate it accordingly to all project stakeholders”. It said it was re-examining its “ability to deliver market changes to proposed timetables, with a view to adopting a more realistic approach in future”. Work continues on upgrading the Modis system, which will also have to be connected with the new electricity balancing system when it starts operating.
 EBSCR lessons learnt report


Further reading

Ofgem reiterates need for reliable market information as it publishes Remit data

‘Essentially manual’ balancing system takes the strain as National Grid’s new dispatch software is delayed until 2018

Legislation outlawing data flows between gas and electricity System Operators ‘not fit for purpose’ as cold snap tests interaction

The New Power Interview: Charlotte Ramsay, National Grid

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